Private Equity Hospitals Deemed Threat to U.S. Healthcare: Report

Senate Budget Committee says private equity hospitals pose a particular threat to healthcare in rural and other underserved areas.

In a newly released bipartisan report, the U.S. Senate Budget Committee has identified two private equity firms as particularly harmful to American healthcare, accusing such firms of prioritizing profits over patient care when acquiring hospitals in the United States.

Private equity firms, which pool investor funds to acquire and manage businesses, have been actively investing in and purchasing hospitals for over two decades. These firms typically employ leveraged buyouts, using borrowed funds to acquire financially struggling facilities with the intent of restructuring and reselling them for significant profit within a few years.

While this approach can inject much-needed capital into healthcare systems, critics argue it often prioritizes short-term financial gains over long-term patient care, potentially compromising the quality and accessibility of services in the communities these hospitals serve.

According to the Profits Over Patients report (PDF) published by the U.S. Senate Budget Committee Bipartisan Staff this month, private equity-owned hospitals “pose a threat to the nation’s health infrastructure, particularly in underserved and rural areas.” The report highlights the hazardous conditions patients often face at these facilities, while the managing firms continue to generate hundreds of millions of dollars in profits.

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In particular, Senate Budget Committee Chairman Sheldon Whitehouse (D-RI) and Ranking Member Charles E. Grassley (R-IA), pointed to two firms, Apollo Global Management and Leonard Green & Partners (LGP), whose nurses have been accused of overdosing on drugs stolen from the hospitals and sexually assaulting patients.

The report also highlights Prospect Medical Holdings (PMH), a company in which Leonard Green & Partners (LGP) has been a majority stakeholder. According to the senators, PMH has closed at least eight hospitals with “little to no regard for patient outcomes or quality of care.”

Compounding the issue, these closures occurred while LGP recorded $424 million in gains from $645 million paid out by PMH in dividends and preferred stock redemptions, with LGP as the primary beneficiary.

“In sum, the findings of the investigation call into question the compatibility of private equity’s profit-driven model with the essential role hospitals play in public health,” the report concluded. “The consequences of this ownership model—reduced services, compromised patient care, and even complete hospital closures—potentially pose a threat to the nation’s health care infrastructure, particularly in underserved and rural areas.”

Patient Care Worsens After Private Equity Hospital Acquisitions

The Senate report coincides with a study published in JAMA Network, indicating that patient care experiences often worsen following the acquisition of hospitals by private equity firms.

The findings, presented by a team of researchers led by Dr. Anjali Bhatla of the Beth Israel Deaconess Medical Center in Boston, Massachusetts, shows that patients self-report care declining after the acquisition of hospitals by private equity firms, raising serious concerns about the United States’ for-profit hospital model.

The researchers used the Hospital Consumer Assessment of Healthcare Providers and Systems (HCAHPS) survey to determine patients’ overall hospital ratings and whether they would recommend the hospital to others. Ratings were compared between 73 private equity-acquired hospitals and 293 control hospitals.

The results showed that patient opinions of hospital care declined significantly after acquisition by a private equity firm.

This research joins a study published in the Journal of the American Medical Association in August 2024, which showed that hospitals bought by private equity firms often face a decreased ability to serve their patients. Another study published earlier that year, revealed that inpatient hospital complications increase after private equity firms take over.

3 Comments

  • JoshJanuary 17, 2025 at 8:49 am

    Medical costs have become ridiculously high with private equity entering the medical industry. But the high costs don’t end there. For years every product or service that is associated with the medical industry is affected by price gouging. If its item is for medical purposes the profit margin is automatically doubled. And don’t even get me started on the pharmaceutical industry. That’s another i[Show More]Medical costs have become ridiculously high with private equity entering the medical industry. But the high costs don’t end there. For years every product or service that is associated with the medical industry is affected by price gouging. If its item is for medical purposes the profit margin is automatically doubled. And don’t even get me started on the pharmaceutical industry. That’s another industry that is affected by the high profit margin illness.

  • AdamJanuary 15, 2025 at 5:17 pm

    Nothing like injecting some financial bottom line type leadership into our hospitals to improve patient outcomes. What needs to happen for people to understand that healthcare cannot function as a for profit? Patient outcomes and profits cannot exist as equal priorities in this industry. Improving people's health is not profitable, profiting off someone's level of healthcare is deplorable, so[Show More]Nothing like injecting some financial bottom line type leadership into our hospitals to improve patient outcomes. What needs to happen for people to understand that healthcare cannot function as a for profit? Patient outcomes and profits cannot exist as equal priorities in this industry. Improving people's health is not profitable, profiting off someone's level of healthcare is deplorable, so figure it out, most of us either have or will find themselves in the vulnerable position of requiring healthcare in our system, healthy people believe the system is fine, but they will find out at some point it is not.

  • BeverlyJanuary 14, 2025 at 8:05 pm

    I find the entire concept of Healthcare being used as a profit making machine not only very disturbing, but ludicrous. These companies are voracious carnivores, feeding off the flesh and bones of other humans unfortunate enough to develop an illness requiring help from other trained and skilled humans to survive. I believe these people have sunk into the cesspool of capitalism that strips the indi[Show More]I find the entire concept of Healthcare being used as a profit making machine not only very disturbing, but ludicrous. These companies are voracious carnivores, feeding off the flesh and bones of other humans unfortunate enough to develop an illness requiring help from other trained and skilled humans to survive. I believe these people have sunk into the cesspool of capitalism that strips the individual of any understanding, compassion, or insight of what being a human actually means. I can only hope that they will all know the vulnerability, pain, and anguish that comes with illness,. Vulnerability, and hoping that fellow humans will have moral courage, empathy, and respect seems to be disappearing our reality as homosapiens. The almighty coin of the realm has taken over for caring and protecting our fellowship. I see it every day and it pains me greatly.

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